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Growthpoint Properties Limited - The Acquisition By Growthpoint Of A Portfolio
Release Date: 29/04/2004 07:18:44 Code(s): GRT
GROWTHPOINT PROPERTIES LIMITED - THE ACQUISITION BY GROWTHPOINT OF A PORTFOLIO
OF PROPERTIES FROM LYONS CORPORATE LEASE FUND (PROPRIETARY) LIMITED ("LCLFL")
GROWTHPOINT PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
Share code: GRT ISIN: ZAE000037669
("Growthpoint")
The acquisition by Growthpoint of a portfolio of properties from
Lyons Corporate Lease Fund (Proprietary) Limited ("LCLFL")
1. Introduction
Growthpoint linked unitholders are referred to the cautionary announcement
released on the Securities Exchange News Service of the JSE Securities
Exchange South Africa ("the JSE") on Friday, 26 March 2004, in terms of which
it was announced that Growthpoint had submitted an offer to the board of
directors of Lyons Financial Solutions Holdings Limited ("Lyons") to acquire a
portfolio of properties from LCLFL. LCLFL is a company in which Lyons holds a
45% equity interest, with the remaining 55% of the shares being held by The
Rainmakers Investment Trust, of which Lyons is the 100% beneficiary.
Investec Bank Limited is authorised to announce that Growthpoint has
entered into separate sale and purchase agreements ("the sale and purchase
agreements") for the acquisition of 11 properties ("the properties") for an
aggregate purchase consideration of R287 950 618 subject to the terms and
conditions as set out in paragraph 3 below ("the acquisitions").
The sellers in each of the respective sale and purchase agreements are
wholly-owned subsidiary companies of LCLFL ("the sellers").
2. Rationale for the acquisitions
Growthpoint management continues to seek acquisition opportunities which
will enhance the quality of the Growthpoint physical property portfolio as
well as the quality, long-term sustainability and growth of the income stream
available to Growthpoint linked unitholders.
Growthpoint also seeks to offer its investors exposure to a sectorally
well-balanced, geographically diversified, high quality physical property
portfolio and a portfolio of listed property loan stock companies and property
unit trusts.
The executive directors of Growthpoint are of the opinion that the
properties being acquired in terms of the sale and purchase agreements are
predominantly high quality, A-grade buildings. This, together with the fact
that a large portion of the tenants of the properties are either listed on the
JSE or are major multi-national companies and that the average remaining lease
period is approximately seven years, makes the acquisitions very attractive
for Growthpoint, fitting well within Growthpoint"s overall investment
philosophy.
The acquisitions, combined with the resultant increase in the market
capitalisation of Growthpoint, also ensures that Growthpoint moves closer to
its previously stated goal of being included in the FTSE/JSE Top 40 index of
the JSE.
3. Terms of the acquisitions
3.1 The acquisitions
In terms of the sale and purchase agreements, Growthpoint will acquire a
portfolio of 11 properties for an aggregate purchase consideration of R287 950
618 ("Growthpoint acquisition consideration") to be settled as to:
- R57 590 124, representing 20% of the Growthpoint acquisition
consideration, through the issue of 9 394 800 new Growthpoint linked units
("the Growthpoint consideration units") at a price of R6,13 per linked unit;
and
- the balance of R230 360 494 in cash, representing 80% of the Growthpoint
acquisition consideration.
The properties forming part of the acquisitions are set out in the table
below:
Seller Property Lease Purchase
description/Tenant expiry price (R)
1 Shelfigret 76 (Pty) Ltd Wiphold October 2006 24 596 818
2 Shelfigret 84 (Pty) Ltd Eagle Freight April 2012 23 358 000
3 Erf 251 Eastgate (Pty) Ltd Avnett Kopp February 2013 15 274 500
4 Omnipact SA Inv 85 (Pty) Ltd ABSA March 2006 8 817 900
5 Shelfigret 88 (Pty) Ltd Nu Payment
Solutions May 2010 6 579 000
6 Quantum Leap Inv 433 (Pty) Ltd ABSA September 2006 13 872 000
7 Liberty Moon Inv 23 (Pty) Ltd Autopage December 2006 25 438 800
8 Quantum Leap Inv 450 (Pty) Ltd Unibank August 2014 82 584 300
9 Shelfigret 78 (Pty) Ltd Gestetner April 2006 32 925 600
10 Fastpulse Trading 22 (Pty) Ltd Nestle August 2018 37 434 000
11 Shelfigret 82 (Pty) Ltd Endemol
Productions May 2009 17 069 700
287 950 618
The average forward yield of the acquisitions, before costs, amounts to
12,15%.
The Growthpoint consideration units will be issued by Growthpoint to the
sellers upon the transfer of the properties into the name of Growthpoint,
which is anticipated to take place after 1 July 2004 but prior to the last day
to trade in order to participate in Growthpoint"s distribution for the six-
month period ending 30 June 2004 ("the June distribution"). As a result, the
sellers, to the extent that they are still holders of the Growthpoint
consideration units, will receive the full June distribution even though they
will not be entitled to such distribution. Accordingly, the sellers have
agreed to an antecedent divestiture of an agreed 35 cents per Growthpoint
consideration unit ("the antecedent divestiture") in relation to the June
distribution. To the extent that the antecedent divestiture is overpaid, the
difference between the antecedent divestiture and the actual June distribution
will be repaid by Growthpoint to the sellers and to the extent that the
antecedent divestiture is underpaid, Growthpoint will receive from the sellers
the difference between the antecedent divestiture and the actual June
distribution. Growthpoint linked unitholders are advised that the antecedent
divestiture of 35 cents per Growthpoint linked unit is not a profit forecast,
but represents an amount arrived at solely for the purpose of finalising the
mechanism for the antecedent divestiture to be included in the sale and
purchase agreements.
3.2 Conditions precedent
The acquisitions are subject to the following conditions precedent:
3.2.1 the approval of the acquisitions by Lyons shareholders in general
meeting to be convened for the purposes of considering and, if deemed fit,
approving the acquisitions ("the Lyons general meeting");
3.2.2 the approval of the acquisitions by the shareholders in general
meeting of LCLFL and the sellers;
3.2.3 the finalisation of certain specific property-related issues as set
out in the sale and purchase agreements;
3.2.4 the approval of all regulatory authorities whose approval is legally
required for the acquisitions, including, but not limited to, the Competition
Authorities, the JSE and the Securities Regulation Panel; and
3.2.5 the acquisitions being advertised in terms of Section 34 of the
Insolvency Act.
3.3 Effective date
The effective date of the acquisitions is 1 July 2004.
3.4 Settlement of the Growthpoint acquisition consideration
The Growthpoint acquisition consideration will be settled by Growthpoint on
the date on which the properties are transferred and registered into the name
of Growthpoint.
4. Pro forma financial effects
The table below sets out the pro forma financial effects of the
acquisitions, before costs, on the basis that the acquisitions were effective
from 1 July 2003 to 31 December 2003 for the calculation of distributable
earnings per Growthpoint linked unit and effective at 31 December 2003 for the
calculation of net asset value per Growthpoint linked unit. The pro forma
financial effects have been prepared for illustrative purposes only and
because of their nature, may not fairly present Growthpoint"s financial
position and results of operations:
Per Growthpoint linked unit Before the After the Change
acquisitions acquisitions(1) %
Distributable earnings per
linked unit (cents) 33,7 33,9 0,8
Net asset value (cents) 530,1 531,3 0,2
Note:
1. Assumed interest rate on the cash portion of the Growthpoint acquisition
consideration of 11%.
5. Special arrangements
5.1 Irrevocable undertakings in respect of the Lyons general meeting
Set out below are the names of the Lyons shareholders, collectively,
holding 373 592 175 Lyons shares, representing 98,2% of the issued share
capital of Lyons who, irrevocably and in writing, have undertaken to vote in
favour of the acquisitions at the Lyons general meeting:
Shareholder Number of % of the issued
Lyons shares share capital
Tradek Baldersons Nominees (Pty) Ltd 307 966 936 81,0
Icarus Nominees (Pty) Ltd 48 032 455 12,6
Garry John Fromentin 17 592 784 4,6
Total 373 592 175 98,2
5.2 Irrevocable undertakings in respect of the general meeting of LCLFL
The board of directors of Lyons, as a representative of a 45% shareholding
in LCLFL by Lyons, irrevocably and in writing, has undertaken to vote in
favour of the acquisitions at the general meeting of LCLFL ("the LCLFL general
meeting") to be convened by the board of directors of LCLFL for the purposes
of approving the acquisitions.
In addition, the trustees of The Rainmakers Investment Trust, which has a
55% shareholding in LCLFL, irrevocably and in writing, have undertaken to vote
in favour of the acquisitions at the LCLFL general meeting. Lyons is the sole
beneficiary of The Rainmakers Investment Trust.
5.3 Irrevocable undertakings in respect of the general meeting of the
sellers
The board of directors of LCLFL, as a representative of the 100%
shareholder of these sellers, irrevocably and in writing, has undertaken to
vote in favour of the acquisitions at the general meeting of the sellers to be
convened by the board of directors of the sellers for the purposes of
approving the acquisitions.
6. Documentation
Given the monetary value of the acquisitions, Growthpoint shareholder
approval is not required for the successful implementation of the acquisitions
and a circular to Growthpoint linked unitholders is not required to be posted
in terms of the Listings Requirements of the JSE. Accordingly, this
announcement is for information purposes only.
By order of the Board
Sandton
28 April 2004
Merchant bank
Investec
Corporate Finance
(Registration number 1969/004763/06
Sponsor
Investec
Bank Limited
(Registration number 1969/004763/06)
Attorneys
Fluxmans Attorneys
Website: www.fluxmans.com
Fluxmans Inc. Registration No 2000/024775/21
